Tax Resources, Inc without Turbotax

For the first time in 15 years I won't be doing my own taxes for the previous tax year (2008). The reason is that last year's international assignment was long enough that I'll have to file taxes in both Germany and in the US, so my employee is going to take care of that for me. This is great, though as a paranoid guy, I'll probably be doing the taxes myself as well to double check what they do.

My biggest concern was with tax audit protection. I was handed a policy that included ambiguous statements about whether or not I would get support for dealing with the IRS. Given that I've received an IRS notice every year since 2004, I figured I'd take ambiguity out of the equation and suck it up and pay TaxResources, Inc anyway.

So I called them, and asked for a renewal. Because I was a turbo-tax filer, I got transferred to a different department. After I got to an agent, I asked if I could be covered despite not using turbo-tax. It turned out that I could be, just at a higher price, $50, rather than $35. Since even the retail package would be worth the $300/year that they charge (one of my friend uses a tax accountant, and according to him it cost him $200 per letter his accountant had to write to the IRS), I just signed up. I don't know whether you can only get this deal if you were a previous year customer, however.

In any case, that's how you get covered if you're not using Turbo Tax to file this year. And yes, every year since I've been using them, they have dealt with the IRS for me, and especially when I was in Munich, where it would have been hard for me to deal with the letters in time, it was a relief to hand it of to professional, competent people to deal with. If you're an expatriate with a company that has a tax audit policy like mine, you are encouraged to pay for whatever protection you need that has you covered.

How I deal with Sleep Apnea and Cycling, Backpacking, and Sailing

As an active backpacker, cyclist and sailor, I refused to let my need for a CPAP machine stop me from doing things I love. So when I was diagnosed with sleep apnea, I viewed the need for the machine with dismay. Since I exhibit none of the typical symptoms of someone with Sleep Apnea (I sleep well and easily, I'm alert when I wake), my friends turn out to be very happy to help carry the CPAP machine so they don't have to hear me snore! For cycling, the Puritan Bennett is a nice lightweight (1.5 pounds, with a light power supply that's no bigger than one used to charge a cell phone) machine that was a pain to carry up the mountains, but no worse than a couple of extra water bottles. Incidentally, my doctor says that an occasional night without a CPAP machine won't kill me, but giving the degree to which I snore, my cycling companions might.

I've noticed that on the web at least, there's next to no information about backpacking with CPAP machines. A lot of this is likely because amongst Westerners, apnea is associated with being fat and out of shape, hardly a precondition for a backpacking/hiking lifestyle. However, among Asians, apnea is usually associated with a small airway, and Asians don't have to be fat or out of shape to have sleep apnea.

For camping and sailing, however, you don't just need a CPAP machine, you also need to carry your power supply with you. In the case of sailboats, they have diesel engines that can power an inverter, but if you ran the diesel engine all night, your crew would be extremely unhappy with you. For camping, there's just no real solution but to carry a big honking battery. Traditional batteries sold by the traditional manufacturers weigh well over 14 pounds. That's fine for a sailboat or for car camping but is not at all acceptable on a backpacking trip!

So I did some research and found Batterygeek.net's C-222 battery which has 222 Watt Hours worth of power in a convenient 5 pound package. I used it on both the Turkey Sailing trip as well as the recent overnight from Castle Rock to Big Basin trip. In particular, on the overnight trip, I started the trip with the battery fully charged (4 bars), and after about 10 hours of use, the battery still read 4 bars at the end of it, giving me hope that the upcoming Tasmanian Overland trail (5 nights) wouldn't strain it at all. (Update: Unfortunately, in practice, the battery will only last for 1.5 nights --- it turns out the battery indicator is just useless)

To their credit, batterygeek's numbers aren't all that promising for the battery --- they promise at most 2 nights worth of use, but the GoodKnight 420E is an auto-adjusting machine, delivering only as much pressure as I need --- my apnea is highly variable, so this means that most of the night I don't need very high pressure at all, but I do occasionally spike really high.

Personally, I don't want to put a "recommended" tag on this post, since I don't recommend having Sleep Apnea (it's genetic, so I don't really have a choice). On the other hand, given that this lets me sail and go backpacking almost like a normal person, it's as good as things can get, until someone makes a fuel cell battery that runs off a few centiliters of white gas or stove alcohol and weighs only a few ounces.

(And yes, batterygeek.net also sells similar sized batteries for folks who want to run their laptops for 24 hours at a time away from power outlets)

Review: Blackmark

Blackmark was drawn by Gil Kane and written by Archie Goodwin from a story told by Gil.

The art is reminiscent of drawings made in Weird Tales for Conan and the like, with strong dynamic lines, with well thought-out layout and a simple story. Unfortunately, Goodwin's writing is not really strong enough to stand next to Kane's art, and is simplistic and filled with exclamation points and declarations.

The story takes place in a post-apocalyptic world, where science is the new magic. It's not particularly coherent as a story, and one senses that Kane wanted a new Barsoom or Tarzan, and tried to build one, but didn't quite have the characterization or story chops to do it beyond revenge or violence. This is perhaps a product of the times.

Not recommended unless you're a nostalgia filled comic-book fan.

Windy Hill OSP

 

Windy Hill OSP

I had never hiked from the bottom to the top of Windy Hill OSP, so this morning Dick & Donna Matthews, Cynthia Wong, Kekoa Proudfoot, and Dan Wallach joined us for a hike in the area. It was cold in the parking lot but it warmed up very very fast on Spring Ridge Trail! It probably warmed up even faster for Dan since due to a misunderstanding, he showed up at the parking lot 20 minutes late and had to run to catch us.

Since it was such a nice day, we eschewed Hamms Gulch for the descent and went with Razorback Ridge trail instead, resulting in a nice traverse of the area and beautiful shaded and cool views, which would not have been welcomed on any normal winter day.

In memoriam: Nikola Postolov

In the wake of all these recent news about health problems, I received more bad news today. Nikola Postolov, who was my intern last summer in Munich working on Gtags. Nikola did many wonderful things, including reducing the indexing time by a factor of 75% (yes, it ran 4 times faster when he was done).

Nikola had a brain seizure on January 3rd, and after a short period in coma, passed away on January 16th, apparently due to some birth anomaly. There were no symptoms (certainly not when he was working for me), and I am very shocked as we were putting him through the intern conversion process so we could (eventually) make him a full time offer at Google --- he was back in school but expected to graduate soon and either pursue graduate school or work in industry.

This is definitely a loss for me, and for computer science in general.

The Serial Angel Investor

Have you ever wondered why successful angel investors almost always invest in more startups? Having gone through the vetting process of some 10-odd startups before settling on one, it's definitely work, and good startups don't come along frequently, but I've seen some angels invest in what I considered questionable businesses (for example, I once saw a startup that could not attract any engineers get funded with about $100,000 of funding --- even during the dot com bubble, this was clearly questionable).

It turns out that there's a roll over rule, whereby the gains from a previously held small business can be put into a new small business (and startups qualify), which means that the afore-mentioned $100,000 of investment really cost about $50,000 after the tax-break is realized. Now, there are all sorts of timing rules involved, but now you know why Andy Bechtolsheim could so casually write a $100,000 check to Larry and Sergey when they demo'd Google to him. Andy has done several successful rounds of startups before, and not only did he know a good thing when he saw it, but he was getting it at 50% off because of this rule!

Now, if you joined a startup early and exercised the options early enough (before $50 million of revenue is reached), then you too can qualify for this break. Yet another reason to pre-exercise your options (or at least some of them) when you join a startup.

Up and down Highway 9

 

Just a 2.5 hour ride today, straight up and down 9. I've forgotten how fast descents on the tandem are. It'll take a bit to get my skills back, so I took it a bit easy. At the start of the ride, the rear tire looked a little worn, but that turned out to be an illusion. I carried a spare anyway. Gorgeous weather.

Stitching Software

When people ask me how Phil managed to produce this (click through, select download for the full effect):

From Rosenlaui

I pointed them at Hugin.

It took Phil quite a bit of work to produce these, but now there's a really easy way for anyone to produce stitched pictures. Microsoft research has produced a free tool that allows you to simply drag and drop a series of pictures into the composite editor and let it figure out all the pinning, which pictures are in or out of the composite, and all that jazz. Best of all, it runs even on my 3 year old Mac Mini (though you want at least 2GB of RAM). It does suck up all the CPU but the machine is still pretty responsive. I played with it for about 2 hours and here are the results:

Stitched

If Microsoft keeps producing software like this, everyone else in the industry should get very very scared. What annoys me is that neither Picasa nor Lightroom has this integrated into their workflow, and it should be. Click-select-stitch! In any case, this is a great tool, and is yet another reason why my Mac Mini runs XP.

PG&E Trail Hike

PG&E Trail Hike

With temperatures projected to be in the mid-70s, I had to schedule a hike. So Kekoa Proudfoot, Cynthia Wong, and Lea Kissner joined me at San Antonio Park at 9:00am to start up the PG&E trail. Though there was quite a bit of smog in the valley, we were quite a ways away from the smog producers and could get quite high and see the clear skies. Very sweet!

Since it was such a nice day, we tacked on the Mora loop on the way back to the car to gain more views. Note to self: clip toe nails before wearing hiking boots!

Review: Incandescence

Greg Egan has always been one of my favorite science fiction authors, but he's not prolific --- a novel or so every 2 or 3 years is what he seems to do, though he publishes short stories quite frequently. Incandescence (DRM-free Kindle-compatible ebook) is his latest novel.

The novel takes place in the far future, in a universe where the Galaxy has been largely explored by sentient life, which has somehow built a network where digital citizens can interact with each other in virtual worlds, choose to become embodied or remain virtual, and travel as data between star systems at light-speed. The central part of the galaxy, however, is largely off-limits, held by mysterious beings known as the Aloof, though they seem to happily allow their network to be used by other beings as a short-cut across the galaxy.

When a being who has recently used this short-cut unencrypted passes on to Rakesh (the protagonist) her experience, in which the Aloof had none too subtly showed her evidence of DNA-life near the galaxy center, implicitly inviting explorations by non-Aloofs, Rakesh immediately launches an expedition to discover what kind of DNA life could live in that harsh environment.

From then on, we alternate between chapters involving Roi (who we understand to be one of those aliens) and Rakesh's pursuit of her civilization. The two civilizations eventually do meet, but the time frames involved (because of the time it takes even light to travel the distances involved) are more murky.

Rakesh's chapters are interesting, providing what Egan's view of virtual travel combined with embodiment will be like, but doesn't explore any of the other deeper issues, such as if you've been virtualized, why not produce multiple copies of yourself and then merge them eventually --- those issues have been extensively explored in Greg Egan's short stories, so perhaps he felt it would be redundant to explore them here.

Roi's chapters, however, are a mess. While I can understand Egan's desire to provide an exposition of relativity and general physics in fiction, I'm not a big fan of the way he chose to do it --- the way the enlightenment happens just seems unbelievable to me, despite his attempts to use genetic engineering as a way to explore it.

And as is usual with a lot of hard science fiction, the characters are woodenly drawn, with no development whatsoever, and there's a sense of lack of fulfillment towards the end, as the narrative strands end rather abruptly.

If you're a Greg Egan fan, this novel will likely leave you disappointed, though perhaps reminding you why he's far better known for his short stories than his novels. If you're not a Greg Egan fan, start with one of his short story collections instead. They're significantly more rewarding with less frustration --- the issues that come up in his novels just don't show themselves in his short stories.

LDT Shoreline

 

The first Western Wheelers long distance training ride of the year has begun. As is our wont, Lisa & I rode to the start, did the ride to shoreline with the club, and then after lunch rode home (this time via Performance Bikes to pick up some bike shorts for Lisa and a trunk bag for the tandem). The turnout wasn't as insane as previous years (maybe with gas being so cheap nobody wants to ride a bicycle any more?), but it was such a pretty day, I could not imagine not wanting to be outside.

For Lisa & I, it was also a time to catch up with people who hadn't seen for a while.

Health is a wonderful thing...

... and we tend to take it for granted when we have it. For the last 3-4 years I've been struggling with several health issues. Considering that I ride my bike 5000 miles or so a year and take long hiking trips, most people I meet think that I'm a picture of health, and indeed, my health issues (Sleep Apnea and Osteopenia) are by and large under control --- the latter through a change of lifestyle (I used to ride over 10000 miles a year, and had to cut back), and the former with the help of some brilliant doctors, including Dr. Tracy Kuo who managed to get me to adapt well to CPAP Therapy. The alternative would have been surgery, which was too horrible for me to contemplate, though others don't seem to have the same terror of surgery that I do.

So there I was at the start of the year feeling quite good about myself overall, and in general proud of over-coming what could have been serious illnesses and still in general enjoying life, but my first week back at work, and I have lunch with one person who tells me that the reason I didn't see her around (aside from me being in Germany) was because she was on leave for chemotherapy for cancer treatment. And then today I got news that an old classmate of mine from college is also undergoing cancer treatment. Compared to that, I had no health problems, and I'm really grateful to have what I have. These are just people I know. Add that to the deaths of Tanta and OldVet, people who post on blogs I read, and it's hard not to be overwhelmed (at least a little bit) by the sense that Cancer is everywhere.

But incidences like these make me want to go travel and see the world --- who knows how long each of us really have on this planet anyway? On the political front, while I've had to hold my nose to vote for Obama last year (mostly because of his healthcare positions), if he manages to pull off his health-care plan, then all is forgiven. I don't even care what else doesn't get done. I can stand increasing inequality, and I can stand nothing getting done on global warming (something I consider the most important problem mankind has to face), but from a personal point of view, the fact that I'm un-insurable (health-wise) as an individual (as explained by my earlier post on healthcare policy) is definitely something that has made me into a single issue voter.

My digital conversion (part IV)

[This is a summary of the research and thoughts I've had over the last few days]

Let's go back to basics for a minute here. Let's start with what I consider the fundamental problem of photography. Our eyes and brains together create a dynamic visual imaging system that's capable of handling the real world contrast ratios of 1000:1 or so. That's why when you're watching a sunset, the sun doesn't blow out and become a big white spot in the middle of the field of view while the flower that's in shadow in front of you becomes completely black. This magic is accomplished by your eye, which moves continuously all the time, even when you think you're keeping it still. Your brain composites all those continuous inputs and gives you an illusion of a continuous whole. In addition, it automatically does white balancing for you, so even in the tungsten lamp of your house, white still looks white. All this was done because of evolutionary pressures, though some folks (mostly men) have deficient color sensors in their eyes (I'm red-green color blind myself).

Slide film, lacking the brain behind the eyes that is your window to the world, only has a dynamic range of 5:1 (5 stops --- hence your camera's exposure meter only covers about 5 stops or so). That's why there are many days in which you'll swear you pointed your camera at a scene with a blue sky but found that while your foreground is properly exposed, the sky was white! Or the sky was blue but your foreground was a silhouette. Professional photographers have many tricks with which to attack this problem, including fill-flash, and my favorite tool, the neutral density graduated filter. The late Galen Rowell once showed me a usable photograph using 2 ND grad. filters and fill-flash, demonstrating complete control over the medium.

Color negative film is a much more forgiving medium, with a dynamic range somewhere around 8:1 (i.e., you can be off by about 2 stops and still get a usable photo). However, prints generated from the color negative film have a much worse contrast ratio than even slide film, around 4:1. This is because light has to penetrate the upper layers of the print, bounce off the white paper at the bottom, and then enter the viewer's eyes, while a slide project passes through the film just once. So even though a color negative might have a lot of information stored in it, the printer has to perform a lot of interpretation in order to get that information down onto paper. This is both a good thing and a bad thing, since that also gives the printer a lot of leeway to cover issues with the exposure or emphasize something that wasn't the intention when the exposure was made. Most photographers don't get good enough at darkroom work to be able to make the interpretation themselves, so they have to work with a good lab or printer to make the right thing happen. It is this issue that caused many museum curators to consider only black and white film to be fine art, since black and white photographers (such as Ansel Adams) could and did make their own prints from negatives.

Enter digital. When I first signed up for the Mountain Light workshop with Galen Rowell, the way to get a photograph into digital form was mostly to use color slides or negatives (slides were preferred) scan them, and then manipulate them. If you had a lot of money, drum scans would generate a 75MB image from your Fuji Velvia slide and you could then play with it digitally before getting output from a $150,000 lightjet printer.

Today, we capture photographs directly from a digital camera. If the digital camera produces JPG files directly, that's like getting a slide out of it --- the amount of manipulation you can do is limited, and your exposure had better be perfect. Everything has to be done before you press the shutter release. That means all the old techniques have to be put into play --- fill-flash, ND grad. filters, the works.

Shooting RAW, however, is like getting color negatives --- you have lots of information stored from the camera sensor, and you can be as much as two stops off on your exposure and still be able to recover highlights or shadow details in Adobe Lightroom or other RAW processor. Obviously, it's still better to get the exposure right in the first place, but forgetting to check your camera settings before pushing the shutter release is no longer going to necessarily be a complete disaster (or even waste the 50 cents per slide). In fact, Lightroom even has a graduated filter among its tools, so you can apply a graduated filter after the fact (up to 4 stops). To me, that's just amazing. Obviously, for those 10:1 dynamic range photos, you still have to pull out your ND grad. filters, but that means you can shoot in more challenging situations, and your camera just became a heck of a lot more forgiving (unfortunately, it also makes it possible for you to be a lot more sloppy!).

With the advent of High Dynamic Range imaging, it's now even possible to compose shots and put them together in Photoshop in such a way that was impossible to do with mere filters before. The digital darkroom (for me anyway), is far less toxic than the chemical darkroom, and a lot more forgiving of mistakes as well --- screw ups no longer cost you in chemicals or hours of work when the undo button is available. Storage is cheap and getting cheaper, so backups are also easy to get.

All in all, I'm excited about the possibilities of digital photography --- it's taken a long time for the industry to come out with a digital camera that made me want to part with Fuji Velvia for serious landscape work, but now that I have one, there's clearly a lot of learning for me to do!

Black Mountain Hike

Black Mountain Hike

The usual parking space was full up, so we went to the new alternate parking spot, which was quite a ways away since Los Altos had re-organized all the dirt parking since the last time I had started up Rhus Ridge. The weather was clear and gorgeous --- really pretty, but we made pretty slow time since I was lugging the 5D2 and was wearing hiking boots besides (to keep them broken in after last week's trip).

Up at the top, we could see all the way to San Francisco and the ocean. What a beautiful day!

2009 Book Reviews Index

Note: The Books of the Year for 2009 have been picked.

Fiction

• Thirteen
• Incandescence
• The Best of Michael Swanwick
• Stark's War, Stark's Command, and Stark's Crusade (3 reviews in 1)
• JAG in space (4 reviews in 1)
  
• Daemon
• The Talisman
• The Magic of Recluce
• The Towers of Sunset
• The Magic Engineer
• The Order War
• Fight Club
• Revelation Space
• Galactic North
• Chasm City
• Redemption Ark
• Absolution Gap
• The Steerswoman
• Soon I Will Be Invincible
• The Prefect
• Relentless
• The Steel Remains
• The Graveyard Book
• The Outskirter's Secret
• Diamond Dogs, Turquoise Days
• Zima Blue and Other Stories
• Century Rain
• Pushing Ice
• The Lost Steersman
• The Language of Power
• Wireless
• House of Suns
• Mercury Falls
• The Six Directions of Space
• Transition
• Passage At Arms
• Snake Agent
• Treason

Non-Fiction

• FDR
• The Promise of Sleep
• Almost Perfect
• My Life as a Quant
• The Science of Fear
• The Age of Entanglement
• After the Software Wars
• Sex Sleep Eat Drink Dream
• Born to Run
• The Numerati
• More than you know
• The Luck Factor
• Enough
• Engineering Your Retirement
• Crazy for God
• Every Landlord's Tax Deduction Guide
• The Investor's Manifesto
• Stop Acting Rich
• Your Money & Your Brain
• How the Mighty Fall
• Connected: The Surprising Power of Our Social Networks and How They Shape Our Lives
• Better
• Stabilizing an Unstable Economy

Graphic Novels

• Blackmark

Review: Thirteen

One always knows what to expect from a Richard Morgan novel: sex, violence, and super-soldiers. Thirteen (kindle edition) deviates slightly from this --- there's not a huge amount of sex, and the violence is interspersed with a lot of philosophy and ruminations of human history. I like it.

The theme here is human evolution, and genetic engineering. The world is ours, set in a near future in which the US has been split into Jesusland and annex portions of the Pacific Rim and Europe. Our anti-hero protagonist, Carl Marsalis, is a genetically engineered human, called thirteen, a genetic throwback to the days when human society wasn't as feminized. Such a soldier, of course, would be remorseless and single-minded, and almost completely impossible to control. When the authorities learn that a renegade thirteen has been released, they spring Marsalis out of his current predicament and set him to find the renegade.

The milieu is portrayed as dispassionately as only a foreigner can --- while Morgan's definitely done his research, he is definitely not attached to the idea that the US is anything special (at one point, there's a comparison between modern Turkey and the current USA, which wasn't a connection I would have made). Morgan uses this world as a vehicle to explore issues such as the role of masculinity in a world where it seems that the only thing left for men to do is to propagate violence.

The pacing of this book, however, isn't picture-perfect the way Morgan's previous novels are. The story drags in the first half, and towards the end, with all the violence piled in together, feels numbing to me. There are, however, several moving scenes all interspersed in between, which provide enough of a candy to keep me going.

All in all, a good start to the year, and recommended reading. Just make sure you read Altered Carbon first if you haven't read it yet, as that is still the best Richard Morgan book to start with.

Arastedero Loop

It was a gorgeous day for a ride, so we went for a medium-length ride in the area, with the sun out, lots and lots of cyclists were found riding around, and we spotted no less than two tandems. Lunch was in downtown Los Altos, where there was no sign of a recession --- parking lots were full, and the restaurant lines were long.

All through the ride, Miyuki Nakajima's 永遠の嘘をついてくれkept repeating in my head. If they ever make a version of Rock Band with all her songs I'll have to buy it and see if familiarity with the song makes the game any easier.

Stock Compensation At Startups

Typically, startups offer stock options to employees (especially engineers—who can't obviously be paid through a commission). The obvious numbers involved are the number of options, the strike price, and the vesting period. The number of options and the vesting period is typically known before you take the job, but the strike price can change between when you take the job and when you start and when the options are priced. Typically, the offer letter will contain language such as, “I will recommend to the board that you receive 10,000 options to purchase company stock at the prevailing market price.” There's nothing suspicious about this—I've never heard of a company that did not live up to such promises in the offer letter.

Here are the variables in stock compensation that you should think about.

Number of Options

This is the top-line of options compensation—it represents the amount of equity you own in the company. Many people focus on the number of options they get as though the absolute number means something—it doesn't. What matters is the percentage of the company you actually own. As such, this number only means something when you also know the number of outstanding shares in the company.

To emphasize this, one of my friends joined Commerce One back before it did an IPO. She was offered 20,000 options but the company had so little revenue that at the IPO, the investment bankers reversed-split the stock, so she only had 10,000 options. 6 months after the IPO, the stock had gone to $600/share, and the board decided to split the stock 4:1, so now she had 40,000 options at $150/share. What's the difference between 10,000 options at $600/share and 40,000 options at $150 a share? Exactly nothing.

Typically, the percentage compensation goes something like this:

Table 3-1. Typical Stock Compensation

Title	Percentage of company
VP of Engineering	0.5% and up
Senior Engineer and above	0.1% and up
Entry-level Engineer	0.05%

Note that these numbers are typically adjusted by the stage of the startup (and thus the amount of risk you're taking by joining the company at this stage) as well as the generosity of the founders and the board/venture capitalists involved in the company. Google, for instance, was known as being very generous to its employees with options, while Reed Hastings a few weeks after the IPO of Pure Software, Inc., told me that his big regret was not spreading more of the stock around. My advice to founders is to spread the stock around—having motivated employees participate in your success will be something you'll be extremely proud of.

Now, that percentage of the company you own is not fixed. For instance, as new investors add money to the company, the earlier employees (and investors!) get diluted, so their percentage ownership of the company goes down—this is perfectly normal, and is to be expected, so if you feel that you're not getting a fair shake in the scheme of things, please do not forget to add in a dilution factor, especially if you're early stage. A study I read once indicated that dilution in Silicon Valley is about 1% of the company per year, but for startups, that tends to change dramatically as new money comes in. If the company is successful, the valuation of the company will increase at each funding round, so the dilution is usually not a big deal. Hardware startups, however, require huge infusions of capital after the design phase is over and the company has to fund production, so in those cases a big dilution event could pre-date launching the product. This is one of many reasons why so many companies have gone to outsourcing their production, so their upfront costs are reduced. Obviously, if a company's schedule slips or customers don't show up as expected, then further rounds could be "down-rounds", so the dilution could be substantial in those cases as well.

Vesting Period

The vesting period is the time it takes for you to own all the rights to your stock-options. The Silicon Valley period is 4 years with a one year “cliff.” That means if you leave the company within a year of joining, you forfeit all rights to any options at all. After the first year, the standard is that each month another 1/36^th of your options continue to vest. That means if you got 10,000 options and left the job after 3 years, you get 7500 options when you leave. Note that most option agreements tell you that you have a limited period of time after you leave to exercise those options, so if you think the company has a good chance of success, don't quit your job and forget to exercise those options. It also means that if you really hate your job after 11 months, grit your teeth and stick around for another month just in case the company turns out to be valuable.

I have occasionally heard of 5 year vesting periods (usually also with 1 year cliffs). These are usually far more common outside Silicon Valley, where the average employee isn't as savvy about stock-options. I generally advise against accepting such offers in Silicon Valley (unless, you're absolutely convinced that this company will be extremely successful—such as being profitable).

Price

The next obvious variable is the price. Since most startups are not traded publicly, this price is set by the board of directors. The board of directors takes into account several factors, including the revenue (usually meager, but can be substantial at a late stage startup), the product development cycle, partnerships that might be occurring, as well as the most important factor, employee morale.

One would think that a big factor in the price would be that of investors who put in money (usually venture capitalists, but sometimes big companies, as in the example of Microsoft investing in Facebook at a $15 billion valuation in 2007). After all, typically the lead investor at every round usually sets the valuation of the company. The reality, however, is that the internal valuation (as expressed by the stock option prices that new employees get) is usually set at 1/10^th of the price that the previous lead investors got. This difference reflects the sweat equity that employees put in. There's no startup in Silicon Valley that will risk having valuable employees walk out just because they got taken to the cleaners on price—in fact, even in cases where the company did a complete reset (i.e., zeroed out early investors' equity and revalued the company at a lower price because the business model has completely changed), employees would usually get new options and are somewhat protected from such events in order to retain them. (Think that such resets almost never happen in the case of successful companies? Think again—Veritas was one such example)

Ultimately, however, price does not matter as much as the amount of equity you got, and I wouldn't sweat it too much.

Pre-Exercise Option

This is now a standard feature of Silicon Valley contracts, and if it's not in your options package you need to negotiate for it. Basically, this lets you exercise your options (even the unvested ones) at the provided strike price. This matters because of the huge difference between long term capital gains taxes and short term capital gains taxes. Short term capital gains taxes are taxed like income, leading to tax rates of up to 40% on a federal basis, and as much as 50% for Californians (where most startups are based). By contrast, long term capital gains usually gets favorable treatment—as low as 15% during the Bush tenure.

The catch is that when you buy the stock, the difference between the current market price and the price you paid is immediately taxed as income. Note that if you join a company and immediately exercise the options before the price goes up, no tax is due, so that's the best time to do it. (At an early stage startup, it might make sense to wait since you know that the stock isn't going to go up any time soon)

This is such a massive tax-break that during the dot-com bubble of 1995-2000, many folks took insane risks in order to try to get this tax-break, by pre-exercising their stock options when their company stock was at a high, and then finding themselves unable to pay the tax due immediately the next April. Again, the solution here is to exercise early, before these things become headaches, or, if you're at a risky company whose stock just did amazing levels, forget about making that extra 25% and just sell—you don't need to compound your risks.

The way the pre-exercise clause works is this—you'll buy the stock and own it like any other stock-holder. That means that if the company goes under you're out the money, just like any other investor. However, if you leave the company before the options vest, the company has a period of time (usually between 60-90 days) during which it can buy back the stock from you. (There's an apocryphal story in which a well-known company's stock administration department was so disorganized that even though an employee had only worked there for a year, the company forgot to buy back its stock so the employee got the benefit of four years of vesting for a year's worth of work!) In any case, there's an argument to be made that if you don't believe in the startup you're working for, you have no business being there, and conversely, if you do believe in the startup, then exercising the stock makes sense, as the cost of doing so is usually low.

Qualified versus non-Qualified stock options

Tax-law distinguishes between ISO (Incentive Stock Options) and NQO (Non-qualified stock options). There are minor tax differences between them, so I'll summarize them in the table below:

Table 3-2. ISO versus NQO

	ISO	NQO
Holding Period for long term capital gains	2 years from grant + 1 year after exercise.	1 year after exercise
AMT implications if exercise price lower than current stock price	Timing-based AMT—you get an AMT tax-credit	Not-timing based. All difference is taxed as income.

One kind of option is not better than the other, since their tax-treatment is only slightly different. However, if a company used to give out ISO and recently switch to giving out NQO, then what you want to do is immediately exercise your options as quickly as you get them—it's a signal that the company is expecting a liquidity event soon, since the non-qualified options have a favorable tax-treatment for employees who are getting their options close to the IPO/buy-out date.

AMT Implications

Typically, when you exercise your stock options, if there's a difference between the strike price and the current market price, tax becomes due. In the case of ISO, all the tax due is AMT tax. This means that if your AMT tax is lower than your regular income tax, you owe nothing. Conversely, if your AMT tax for that year is higher, you pay the difference, but you get an AMT credit that you can use in future years to lower your taxes when you do sell your stock.

For NSO, there is no confusion—any difference is paid as income tax, and you get your stock cost basis set at the current market value. You do not get any AMT tax-credit because it is not considered timing-related.

Accelerated Vesting (change of control)

This is an increasingly common clause in stock options packages, but the amount by which the accelerated vesting happens varies dramatically from company to company, so it makes sense to pay attention to this clause.

Accelerated vesting is usually an executive-protection clause—it's not unusual for some members top management to lose their jobs in the case a company gets bought out, and so to ensure that they don't scuttle such deals (which are usually good for shareholders), in the event of a buy-out, their options vest at an accelerated rate ranging from 6 months to 2 years (yes, that's two free years of work vested immediately upon the buy-out—really sweet, I don't see that very frequently). Since stock option packages generally aren't any different between executives and rank-and-file, employees get the same package by default.

While I wouldn't quibble much about accelerated vesting as long as there was something, I would try to make sure that such a clause exists in the stock option agreement—if a big company you dislike immensely chooses to buy the startup, you want the option to walk out if the work environment becomes extremely unpleasant, and this is a tool to ensure that you can.

It is interesting to note that options holders and stock holders can get different treatment in the case of a buy-out, and this is generally another reason you want to exercise your stock options early—you will usually get better treatment as a stockholder than as an option holder, and these include voting rights and early notification of proposed buyouts, since your votes have to be counted in such proposals, while options holders don't need to be notified since they don't actually own the stock.

You can now buy the book this post is just one part of!

My Digital Conversion (Part III)

Canon 5D Test Shots - Edited

My brother and I went out and did the traditional Matt Davis/Steep Ravine loop and to shoot some pictures (well, ok, to fill up the 4GB CF card with 140 frames so as to learn the camera's characteristics). Right off the bat, it seems like I need to read the manual again --- while I thought I knew how to turn on movie mode and live view mode, it turned out that I didn't. This despite having already done it once at home! The UIs are definitely more complicated.

We didn't make it out early enough, so the pictures aren't really spectacular, but hey, it's a test series. The 24-105/4L does live up to its billing as a do-everything lens, and stayed on the camera whenever I needed it. I got used to turning IS off on the tripod, only forgetting it for a couple of frames. Getting out the ND grad. filter was great, and I think I have to remember to get it out more often. We got in a few lovely sunset shots at the Marin headlands, tried a macro shot, a bunch of portraits, and fill-flash.

The big shock for me is in the post-processing. Lightroom is slow. So slow that during the import I had time to go take a shower. Then during processing, it seems to suck CPU for no reason whatsoever. In fact, on my machine, it's so unresponsive I couldn't even try the graduated filter tool! I can definitely see how it's new PC time when I get back from Australia and have to process 100GB worth of pictures. Then the export to JPG (so that Picasa can upload it) is also seriously slow, inexplicably chewing up both cores for 3-4 seconds at a time, with a 1.5s interval in which it does nothing. They definitely need to hire a performance engineer to tweak the heck out of this tool (unfortunately, as long as PCs keep getting faster, they have no incentive to do so). And of course, the program crashed during a zoom/unzoom on a file. This is one poorly written program --- unfortunately, Picasa is aimed right at the point and shoot cameras, and it is doubtful that Picasa will grow to match Lightroom's feature set any time soon.

The good thing about the digital workflow is that RAW really does work a lot like a digital negative. (Note that my monitor still isn't color calibrated --- that'll wait until the new PC) I can rescue horribly over-exposed pictures that I would have given up on with slides and thrown out (obviously, it's still much better to shoot perfectly exposed pictures). Cropping also makes impractical compositions work well, and white balance adjustment saves having to carry and use 81B warming filters. (You'll still need a circular polarizer though!) Lightroom even has a graduated filter options, but I couldn't use it because it's so slow. I'll have to try it on my brother's computer tomorrow to see how it goes.

All in all, an excellent learning experience! It's good to get back into serious photography after 5 years away. I'm rusty as heck, but my skills are returning. (And seriously, most of the work is getting up early, staying for sunset, and remembering to use a tripod!)

2008 Books of the Year

I read 91 books in 2008, well over twice the previous year's rate. This makes evaluation difficult because I read so many good books! There were more than the usual number of clunkers as well, largely because I would occasionally run out of books I bought for the Kindle and hence resort to free fiction, which generally is not to my taste.

The book of the year for me was definitely The Trouble with Physics. Not only is it a great book specifically about string theory, it's an excellent critique of the way science is done, and how science in general has a very hard time dealing with mavericks, deep thinkers, or people who aren't necessarily technical adepts, but nevertheless can have amazing insights. Highly recommended, and worth reading for anyone at all interested about science. A runner up in this category is Brain Rules! (a great book about how your brain works), followed by specialty interest The Story of the Tour De France, Vol I (Vol. II was not nearly as good).

As usual, fiction books run a second to non-fiction, and also to older fiction. I could easily say that the best novel I read this year was A Wizard of Earthsea, but you'd consider me cheating, and rightly so --- the book was published in the 1960s, but if you haven't read it, please do. I think it's amazingly well-written and stands up to time --- the human condition certainly doesn't change much, so enduringly good fiction is still great.

The best new novel I read this year was Adiamante, for its exploration of important issues and a critique of the military approach to problem solving. But that's closely followed by runners up The Dragons of Babel and The Atrocity Archives, both excellent novels and very much worth your time. I would also be remiss if I didn't mention Richard Morgan as the best new-to-me author of the year. I'm working through Thirteen right now, and it's great reading, as much fun as Altered Carbon. It's so great to see an author continually produce great work, since it means there's more great reading to come. Tim Power's Declare also deserves an honorable mention.

Finally, let me plug the Kindle one more time --- it truly is the first interesting improvement to the reading experience, and I like it more and more, especially when comparing it to paper-books. If you are a serious reader (of books that are mostly words), you owe it to yourself to get one. Forget the rumors of the 2.0 version, just get it. It's just about doubled my reading rate, and has paid for itself several times over.

Inflation

Most of the time when I think about inflation, it's in terms of CPI, CPI-U, or other such statistic. You can argue about whether these capture the typical consumer's expense, or whether the government has an incentive to cheat on these things.

Nevertheless, I'm not your typical consumer --- while I'm a cheap-skate in most things, I do tend to have a policy of buying the best when it comes to outdoor gear. Most of that is because I'm enough of a wuss that even mild discomfort is disturbing to me, and some of it is because very few people try to ride bicycles across countries.

In 2005, while preparing for the Coast to Coast, I decided that my boots were what made hiking difficult --- I chafed, blistered, and was always in agony at the end of a hike. So I found Charles Van Gorkom and asked for a pair of custom hiking boots for what was (to me anyway) an incredible price of $700 (with a 5 month wait). Van Gorkom was a pleasure to deal with, and when there was an issue with my boots he immediately took them back, repaired them, and got them back to me with rapidity (he apologized profusely for what should be an uncommon failure).

Well, right in the middle of my long walk, Van Gorkom was named in various magazines for being the custom boot-maker, and now he charges $1600 for a pair for a 23 month wait. And get this, to get the same 5 month wait, you'd have to pay a rush fee, bringing the cost of a pair of boots up to $3000! (Incidentally, what my walk taught me is that even the most comfortable pair of boots I ever bought are still just boots, and aren't as good as running shoes)

Similarly, I bought my custom frame from Carl Strong earlier this year, and now he's raising prices as well, though not by 200%. My first thought was, "Darn, if only I could pick stocks the way I pick custom builders for boots and bikes!"

Unfortunately, I can't, so I'm mostly a passive investor. But if you want to know what my current picks are for boots and custom frames, I'd pick Esatto (Review) for boots,and Bill Davidson for frames. That's the nice thing about a market economy --- there are always alternatives for those who aren't name-conscious.

But there you go, if you want exactly what I bought a few years ago, your inflation rate can be as high as 30% a year!

Tax Loss Harvesting

I can really tell that the end of the year is coming and the state of people's portfolios by the kind of questions I get. This year, the theme is tax-loss harvesting. In prior years, this wasn't much of an issue because people didn't have any losses to harvest!

Losses are first used to offset gains (i.e., gains are untaxed if accompanied by losses of equal amount). If there are any excess losses, those go against up to $3000 of earned income, and the remainder can be carried over to future years. [Update: I remember that it used to be that only long term losses could be used to offset income, but it looks like this rule changed out from under me]

Other things to watch out for:

• When taking your losses, you might want to do so before the record date of the dividend payout. This reduces your income so you get taxed less, and actually doesn't cost you the actual dividend, since for most mutual funds, the net asset value (NAV) drops by the equivalent amount on the record date, so you might as well take the reduced capital loss rather than getting taxed on it.
  
• When buying an equivalent equity holding, please note that VIPERs are considered equivalent to their mutual fund, so if you're selling VFWIX, you cannot buy VEU. That's because VIPERs are a specially carved out portion of the actual mutual fund. If you do this, you'll end up hitting the Wash Sale Rule, which will in effect zero out your capital loss.
  
• It is OK to buy an equivalent fund that tracks a different index. For instance, you can buy VGTSX to substitute for the afore-mentioned VFWIX, and then switch back 31 days later. (It is generally better to hold VFWIX because of the favorable foreign tax-credit distributions treatment)
  
• You can even split your fund and buy components (for instance, buying the Pacific, European, and Emerging Markets funds at the appropriate proportions), at the expense of making your portfolio more complicated.
  
• When buying the equivalent fund, be careful to also avoid buying the dividend.
  
• As mentioned before, turn off reinvestment of dividends and capital gains in your taxable accounts, so that you can do effective tax-lot account in the future.
  
• If you're planning on being able to be selective about which tax losses you take, then ETFs are the right model for you, not mutual funds. Vanguard, for instance, makes it quite difficult to get lot-based accounting for sales, which makes such manipulations difficult --- I don't frequently run into these issues because I usually sell all or nothing in a fund I own

When looking at the wash of red-ink over your portfolio at the end of this year (unless you're actually making money, in which case, you should be blogging about money instead of reading my blog), there is one consolation, which is that all this money in your portfolio is effectively tax-free while you still have unrealized capital losses. While that's not something to be happy about, it does mean that your tax bills will be much lower in the years ahead. Given the likelihood of the Obama administration raising taxes (and yes, you can blame the unusually low tax rates in the last 8 years for at least some of that --- we could have used that money to run a budget surplus for problems such as the financial crisis), that's something you can be grateful about.

My Digital Conversion (Part II): "Film" is Cheap

I was working through how much storage I would need over a 2 month trip in Australia. My standard is about 30 rolls for a 3 week trip (10 rolls a week). So an 8 week trip would be 80 rolls of film, or 2880 exposures. The Canon 5D Mk II generates 25 MB images per shot, so that's 72GB.

17Photo.com is selling Sandisk Extreme III 16GB cards at $70 a pop after rebate. (I chose this card as opposed to the Extreme IV because I'm largely a landscape shooter, so I'll only need something fast enough for the typical movie) To get it all in Compact Flash I'd need 5 of those cards, or $350 worth of cards. But I don't even need to spend that much, since I can get a 250GB Wolverine Pic-Pac for $145 or so. That should cover even the worst circumstances (i.e., I go crazy and shoot twice as much as I do because digital is cheap) By contrast, to get 80 rolls of Velvia exposed and processed would cost $800. And of course, this is a one-time expenditure that will likely never have to be spent again. And of course, the weight/space savings over 80 rolls of Fuji Velvia is substantial.

What else am I getting for my camera? A circular polarizer, a UV filter (for when I'm on boats), Singh-Ray ND grad filters (2 stop and 3 stop) --- I've been using the Hi-tech filters, but I want something with a harder stop, 77mm adapter ring for the Cokin "P" system, the wide-angle Cokin "P" filter holder. That's turning out to cost me more than the storage for the camera.

Review: Happiness

Happiness: Unlocking the Mysteries of Psychological Wealth is one of the several spate of books to come out about happiness in the past year or two. If you want a video guide, here's professor Sonja Lyubomirsky walking through her book, The How of Happiness:


The idea is that instead of researching unhappy people, psychology can make progress examining positive examples of well-functioning humans as well. As someone who's always been a happy person since his teenage years were over, I was curious as to what the literature and research shows.

Well, I was disappointed. The book is full of aphorisms and generalizations like:

• Higher income makes people more happy, on average, but only for the kinds of problems that money can solve for you. DUH!
  
• Being religious makes people more happy, unless you're not in the United States, an unusually religious country where being religious might help you become more socially accepted. What about the other countries? No details are provided.
  
• You have a happiness set point that you tend to return to throughout your life. Except that it might be possible to change that. No word on how to go about it is provided.
  
• Being extremely happy can actually cause you to die earlier, because you tend to brush off problems and issues that you really need to go to a doctor about. How happy are such people? Are they permanently on drugs?

In any case, I think I got more out of the typical Wall Street Journal column on happiness (e.g., trading a short commute for a bigger house is never a good move) than out of this book. It's not as though most of us are so insensible about our lives and ourselves that we need someone to tell us that money isn't everything (it sure isn't, but it does grease the skids quite a bit!).

In general, not worth your time. Watch Sonja's video instead, or read her book instead.

Castle Rock to Big Basin HQ

 

Castle Rock to Big Basin

Mike Samuel and Tammy Lin joined Lisa & I at Phil Sung's house on Saturday morning for a hike from Castle Rock to Big Basin. This is the first two days of the Skyline to the Sea walk --- this being Tammy's first backpacking trip and Lisa being unmotivated by winter weather to do more than a 2 day backpack, we opted for just the two days.

The morning was cold, but once we got out of the woods along the ridge on Skyline it was glorious and warm. The views were so nice we could see all the way to Monterey Bay, and the walk was mostly well-signed. In fact, we only got lost once, near Waterman Gap trail where overgrown bushes had covered over a trail sign. Waterman Gap trail camp is about 1/4 mile or so from the intersection between highway 9 and 236, but all night we did not hear any traffic or road noise at all. The morning was a bit cold, but some oat meal and hot tea got us going. Still, it took us until 10:30am to leave camp.

The hike along 236 was nice --- I had seen all the scenery before from a bicycle, but the trail gave us frequent deep views into the Redwoods that I'd never seen before, and right after the trail crossed over China Grade road we saw across Big Basin into parts of Skyline that I never did quite see from the road, along sandstone and with some lovely gorges. The drop down into Big Basin was immediately followed by some navigation error, but after noticing that the North Escape road essentially paralleled the Skyline to the Sea trail, I opted to stay on the road for easier walking.

Phil with his usual impeccable sense of timing showed up at the Park HQ just as I was getting out of my boots into my Vibram Five Fingers. All in all, it was an excellent walk with about 831m of climbing and nearly 20 miles of walking. We got to test out a lot of the new gear we bought for the Australia trip, and that was a good thing.

Recommended. I kept thinking along this hike --- how come I've lived in the Bay Area and haven't done this hike before?

My Digital Conversion

In 1998, I took up photography as a hobby. At that time, my friends and I commented that we didn't think we'd be shooting film in 5 years. Certainly, every roll of Fuji Velvia cost $10 (after processing), and I saw one film after another disappear into the obscurity. For instance, I won a $300 prize in Photo Technique UK in 1999 on Kodak Royal Gold 25, a film that disappeared right after my photo ran in the September 1999 issue. (The magazine itself seems to have disappeared or turned into a digital equivalent --- like cycling magazines, these magazines tend to repeat the same topics year after year, so you would subscribe to them for a year and then stop --- though the UK magazines do always showcase fantastic reader photographs!) Come 2003, I was still shooting slides on my EOS-3. I still thought that a digital conversion would happen in 5 years, but then again, I had been saying that for 5 years!

There were many reasons for my resistance --- most of which is the necessary work to deal with post-processing --- I sit in front of computers all day, and coming home to sit in front of the computer some more didn't quite appeal to me. Moreover, many of the consumer SLRs were small-sensor SLRs, turning my beloved 24mm lenses into 35mm lenses. Then in 2005, Google bought Picasa, and I bought my first digital camera and shot the 2005 Tour of the Alps with it. (That's right, the 2003 Tour of the Alps had us carrying 30 rolls of slide film in our panniers!)

Then this year, after looking at Phil's beautifully stitched photos from Rosenlaui, I realized that even a point and shoot was producing amazing results. So when the Canon 5D Mk II was announced and I had a trip to Australia impending in a month, I started looking for one. Despite a recession it seemed to be impossible to find one in stock, so I was beginning to resign myself to sticking with the G9.

But 2 days ago, the work mailing list told me that it was in stock at my favorite photo vendor, so I took a deep breath and bought it. It arrived yesterday, and I've put it through the paces as much as weather permitted. Oh yeah, digital has arrived. Here are the big changes:

• With color balancing being available digitally, I don't have to carry special film, or 81B warming filters. I do, however, still have to carry a circular polarizer.
  
• With Image-Stabilization (IS) lenses available (I got the kit with the 24-105/4L IS), I no longer have to fear hand-held shots as much. I'm still a fanatic about technique though, so will still carry a tripod whenever feasible. (And no, doing it on a walk across England would still be unfeasible --- I've learned that I'm just not fit enough for that, and I'd rather give up photos than stop enjoying the experience) The flip side of that is that I have to remember to keep IS turned off when the camera is on the tripod, since IS actually degrades picture quality if it's on the tripod!
  
• I can potentially not use ND grad. filters (the one tool that distinguishes professionals from amateurs), and rely on a virtual ND grad. filter or a HDR merge, by shooting from a tripod. This has interesting implications but I suspect I'll still be carrying my ND grads and using them --- post-processing is not an adequate substitute for making a good photograph in the first place, and I'm still uncomfortable with this much digital darkroom work. Nevertheless, it might be that I'll convert.
  
• Not shooting film saves about $10/roll. A typical 2 week trip used to cost me 30 rolls or $300. An 8 week trip would cost $1200! And of course, with film you can't shoot as much, so you tend to be a bit more conservative with your shots. Now, having to think before you shoot is still a good thing, so it'll be interesting to me to see how this works out for me.
  
• Going all digital costs money! Sadly camera capabilities seem to be evenly matched to the power of desktop computers. My 2.5 year old Mac Mini with 2GB of RAM and Core Duo processors is woefully inadequate for running Adobe Lightroom. Unfortunately, Picasa doesn't support the Canon's RAW image format yet. And forget about my 5 year old copy of Photoshop 6.0! I guess my experiment with "quiet, always on" machines is over --- I'm going to have to get a big beefy desktop to go digital. When you're actually processing images and movies on the machine, you can't make do with small and quiet architectures. Good thing machines are cheaper than when I last saw them. A quad core machine with 8GB of RAM goes for $1300 nowadays. What amazes me though is how bad Lightroom is about resources --- what the heck is it doing that's so hungry for CPU power? Just panning around pegs both my cores at 100%. And it's not just my machine --- my brother's Core 2 Duo/4GB state-of-the-art-last-year also had both CPUs pegged! I guess while even Microsoft Office hasn't been able to chew up the latest multi-core chips, Adobe's been hard at work making sure Intel's customers upgrade every year to keep up!
  
• Despite my color blindness, I better start color calibrating my monitors! Fortunately, there are (relatively) cheap tools for doing this. Again, I never considered this at all when I was shooting slides. Fuji Velvia comes with its own palette (and I know people who hate it and call it Disneychrome), but once you get used to how it renders the world you just don't tweak it any more (other than pushing the film once in a while). That is so not true when it comes to digital.
  

I guess it's time for this old dog to learn some new tricks! I remember when I attended the late Galen Rowell's workshop way back in 1999, and came back after 3 days with 100X better pictures then when I went into the workshop. Is there an equivalent for Photoshop and the digital darkroom? If so, let me know, because I'm going to be getting rid of all my film cameras in a hurry.

Review: The Dragons of Babel

The Dragons of Babel is the "sequel" to Michael Swanwick's 1993 fantasy, The Iron Dragon's Daughter. The Iron Dragon's Daughter was a heart-breaker --- the opening was gorgeous, beautiful, and when I read that story in Asimov's Science Fiction I knew I would buy the novel when it came out. It depicted what I will called Industrial Fantasy --- a world in which magic works, but all the trappings of the Industrial Revolution are in place --- trains, air-power, and Dickensian sweat-shops. While that novel had fresh ideas on every page, it completely sagged past the first third and I thought it lost its way, despite the brilliance of Swanwick's ideas.

This re-tread of the same world some 15 years later obviously takes place in the same universe, but uses completely different characters. This time, however, I feel that Swanwick has done justice to his ideas. The story takes off so many fantasy tropes and stories that it would be tough to enumerate them all. There's the farmboy who goes to the city and gets taken in by a con-man story. There's the victim of an oppressive dragon who is made into the oppressor of his village story. There's even an "oh, and it was all a dream" story. There's a tragic love story. But they all happen to one character, a boy named Will, who at the start of the story sees a war hit home as the remains of an Iron Dragon (a magic-powered sentient fighter-bomber analogue) lands near his village.

Unlike his previous attempt at telling a story in this milieu, however, the action starts and it then never stops, not for the 300 pages it takes to tell this story. And what a marvelous 300 pages it is! By the end of it all, you've explored a city and several fantasy stories (all twisted in the usual Swanwick fashion), and learned a lot about this world the characters live in. It's a wild, almost psychedelic romp through fantasy-land and whenever I stop I had to pause to take a breath, so it took quite some time to finish this book (that and I had to read it on paper, with no Kindle edition).

All in all, a worth-while read --- easily one of the best novels I've read this year.